By Isaac Salima
State-owned Power Market Limited (PML) has downplayed fears that electricity consumers will be subjected to higher tariffs once the company starts buying and selling electricity.
Under Section 3 of Electricity Act, Malawi Energy Regulatory Authority (Mera) granted PML the single buyer license [of buying and selling electricity] from independent power producers as well as importing and selling the electricity outside the country.
The arrangement saw Escom remaining with the mandate of transmitting and distributing as it holds a system operator licence.
In 2016, the country adopted the single buyer model in order to promote private sector investment and also improve electricity generation and distribution services in the country.
The model has, however, attracted mixed reactions from some quarters that fear that this could push electricity end users to pay more to get the service.
In a statement issued last week, consumer rights lobby group, the Consumers Association of Malawi (Cama), warned that the establishment of a single buyer model did not make economic sense.
“The creation of Power Market Limited is an insult and lack of sensitivity by the government by creating unnecessary and unjustified cost for the supply of electricity in the country. PML is an institution whose creation and establishment is to punish consumers with higher electricity tariffs which, in turn, will have huge implications on the already higher cost of living,” reads the statement signed by Cama Chief Executive John Kapito.
It further says that consumers in Malawi are already paying high tariffs for inefficient delivery of electricity.
However, PML’s Director of Marketing and Corporate Services Villant Jana on Saturday told journalists in Blantyre that there is a lot of misinformation about the single buyer model, saying consumers will not be paying more to get electricity if the company starts its operations.
“Every licensee in the deal will have a portion approved by Mera. The single buyer function was already there and was being managed by Escom and consumers will not be paying more to get electricity because everything is already provided for in the Electricity Act,” Jana said.
“As single buyer, we have our portion of K2 per every kilowatt of electricity sold.
“This is the same amount that Escom was also getting all along as a single buyer; so, we will continue getting the same amount, meaning that there will not be tariff hike,” Jana said.
She further said that the company had been working with Escom in applying for the single buyer licence, adding that the country is expected to benefit immensely from the model.
“Our company was born out of reforms in the energy sector. Our function is to buy and sell electricity power and bring in investments. In collaboration with Escom, we will be involved in planning in order to ensure that we procure power that will meet demands of the country,” she said.
“It is possible as government wishes, that by 2025, the country should be producing at least 1,000 mega watts (mw) of electricity. This is also in our investment plan,” added.
Despite being granted the licence, the company is yet to roll out its operations as authorities said they were working on other logistical arrangements. Media reports last year indicated that the government was considering reverting the single buyer function to Escom, saying the power supplying company should just put its house in order.
PML was created as part of a power sector reform project under the $350.7 million (K242 billion) five-year Millennium Challenge Corporation energy compact that aimed at improving power generation, transmission and distribution infrastructure in the country.
Director of Information in the Ministry of Information Chikumbutso Mtumodzi, speaking at the workshop, urged the media to help in conveying right information to the general public about the arrangement.